U.S. crude oil ended sharply lower on Wednesday, having jumped over three percent yesterday, after a report from the Energy Information Administration showed crude oil stockpiles in the U.S. to have risen more than expected last week.
With the surge in supplies, renewed concerns over excess supply continued to pull down oil prices.
Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 7.3 million barrels in the week ended December 19, while analysts expected a decline of 1.8 million barrels. The report showed U.S. crude oil inventories at 387.2 million barrels, end last week.
Gasoline stocks jumped by 4.1 million barrels last week, while inventories of distillate, including heating fuel, increased 2.3 million barrels.
Meanwhile, the American Petroleum Institute late Tuesday said, U.S. crude stockpiles were up 5.4 million barrels last week. Analysts estimated a drop of 1.8 million barrels for the week.
Recently, Saudi Oil Minister Ali Al-Naimi said OPEC will not reduce production even if non-OPEC producers decide to cut output. He even hinted that his country may increase production if any new buyers come into the picture.
Light Sweet Crude Oil futures for February delivery, the most actively traded contract, dived $1.28 or 2.2 percent to close at $55.84 a barrel on the New York Mercantile Exchange Wednesday.
Crude prices for February delivery scaled a high of $57.15 a barrel intraday and a low of $55.07.
On Tuesday, crude oil futures plunged to end at $57.12 a barrel, up $1.86 or 3.4 percent, on the back of a report from the Commerce Department that showed the U.S. economy to have expanded much more than previously estimated in the third quarter.
Oil was also supported by comments from some Arab members of the Organization of the Petroleum Exporting Countries that oil prices would rebound to $70 to $80 a barrel next year.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 89.96 on Wednesday, down from its previous close of 90.07 late Tuesday in North American trade. The dollar scaled a high of 90.08 intraday and a low of 89.81.
The euro trended higher against the dollar at $1.2193 on Wednesday, as compared to its previous close of $1.2172 late Tuesday in North American trade. The euro scaled a high of $1.2225 intraday and a low of $1.2170.
In economic news, a report from the U.S. Labor Department showed initial jobless claims to have declined to a seven-week low of 280,000 in the week ended December 20, down 9,000 from preceding week. Economists had expected claims to fall to 287,500 last week.
However, continuing claims were up more than expected in the week ended December 13, coming in at 2,403,000, up from a revised 2,378,000 in the preceding week and higher than an expected figure of 2,380,000.
British labor productivity improved during three months to September for the first time since the second quarter of 2013, data from the Office for National Statistics showed Wednesday. Output per hour increased 0.6 percent sequentially in the third quarter, after staying flat a quarter ago. This was the first expansion since the second quarter of 2013. Productivity rose 0.3 percent from the same period of last year, the first increase this year, following a 0.6 percent fall in the second quarter.
Standard & Poor's Ratings Services said it may downgrade the sovereign rating of Russia due to the rapid deterioration in monetary flexibility and the impact of the weakening economy on the financial system. Currently, Russia has ‘BBB-‘ rating, the lowest investment grade. The rating agency placed the ‘BBB-/A-3' sovereign ratings on Russia on CreditWatch with negative implications.
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